Problems of starting a business in South Africa

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Problems of starting a business in South Africa

We have discussed problems of starting a business in South Africa those may need to read as foreign investor. Every single economic detail will point out how South Africa is a great country to do your business in. They have an improving infrastructure, their stock exchange, JSE, is one of the worlds 20 best stock exchanges, and the government is very eager to attract foreign investments. All these showcase how anybody willing to start a business in South Africa will not be facing any sort of problems. However, things are not always how they seem. No matter how great the country may be, there will be some problems that one has to face especially if they are from a different country.

Listed below are some of the problems one might face while starting a business in South Africa.

Language barrier

One of the worst things one can face while working in a different country is the language barrier. Without a common tongue, it becomes very hard to communicate with one another especially in the world of business. While most people in South Africa can speak in English, there are a significant percentage of people who speak their local languages. If one were to invest or start a business in those areas they are likely to have an extremely difficult time communicating with the local workers. It can be a very frustrating thing for them.

Unskilled Work force

South Africa is extremely rich in mineral resources. It is one of those things that attract foreign investments. However, they are poor when it comes to having a skilled workforce. While the population of South Africa may be quite high and their working population is great too, they are not really skilled. The workers in South Africa do not really have enough training institutes or facilities to sharpen the skills of the said workforce. This is why when foreign companies set up business in South Africa; they have a hard time getting skilled workers. Sometimes they have to provide additional training to these employees which can end up being an additional cost that most companies don’t want to bore. It gets even harder when a foreign company is looking to invest in a high tech company as the skilled technicians in South Africa are even lower than other professions.

Funding

While foreign investors or foreign companies are bringing in the additional capital to inject in the economy, the country lacks additional funding from the local sources. This has lead to the country being in somewhat a standstill. The local businesses are not developing, the infrastructure does not reach its full capacity and South Africa as a country suffers. Foreign companies may find this troublesome as they have to inject heavy capital to really bring in the developments.

Weather

South Africa is one of those countries which has a terrible weather all throughout the year. It can be extremely hot during summer, the rainfall can be torrential, and its very humid too. If anyone is looking to start their business in South Africa and happens to be from a different country then they will have a torrid time adjusting to this new weather. They will suffer from heatstroke, and the heavy rainfall may be something new to them. Sometimes the weather alone is going to make that person feel sick and they may not want to stay in the country for too long. Bearing with the weather is one of the compromises one has to make if they plan on making their business big in South Africa.

Late payments

As an international organization one would expect to receive their payments and clear out all their dues within the given time. This is exactly what does not happen in South Africa. People in this country are known for making late payments. It is not only confined to individuals but also to local businesses as well. This makes a very big problem for all the international companies and foreign investors. Late payments can disrupt the day to day running of the business. It makes it hard to balance accounts and close up the books. If a potential investor is thinking about opening a business that deals with local retailers or distributors then they will have an extremely difficult time getting the locals to pay the dues off. This is one of the most common complaints among foreign businessmen working in South Africa.

Red Tape

While the government has expressed desire to make things easier for foreign companies to conduct business in South Africa, there still exists a lot of red tapes. In fact, South Africa may contain the highest amount of unnecessary red tapes in the entire region. Not only does this hamper the growth of the economy it also affects the day to day operations of the companies themselves. It is one of the disadvantages of doing business in South Africa.